The National Energy Board's Role in Crown Consultation

July 27, 2017

The Supreme Court decides the Clyde River and Chippewas of the Thames cases

Written by David Bursey, E. Bruce Mellett, Radha D. Curpen and Stephanie Ridge

On July 26, 2017, the Supreme Court released two seminal decisions that clarify the role of administrative tribunals, such as the National Energy Board ("NEB"), in fulfilling the Crown’s duty to consult with Indigenous groups. These cases reconcile overlapping aspects of administrative, aboriginal and constitutional law that intersect and often collide in regulatory hearings on natural resource projects.

The principles established in these cases will guide the NEB and other administrative tribunals—federal and provincial—that review and approve projects and activities that may affect aboriginal rights. For project proponents and other participants this much-needed judicial guidance is welcome. The Court has answered long-standing questions about how and where the duty to consult is discharged in regulatory hearings.

In the Clyde River case, the Court overturned the NEB decision because of shortcomings in the review leading to the decision. In the Chippewas of the Thames case, the Court upheld the NEB process. Together, the two cases outline the Court's view on how to reconcile the structured process associated with a quasi-judicial proceeding with the evolving and flexible process of Crown consultation.

An NEB approval that is the final step in an application constitutes Crown conduct and can trigger the duty to consult.

The Crown may rely on an administrative tribunal to fulfill its duty to consult, in whole or in part, if the tribunal has the statutory powers to do what the duty to consult requires in the circumstances.

Where the regulatory process does not achieve adequate consultation or accommodation, the Crown may take further measures to meet its duty—case-by-case or more systematically through legislation.

The NEB has the procedural and remedial powers to discharge Crown consultation and to accommodate affected Aboriginal claims or Aboriginal and treaty rights.

When the Crown intends to rely on the administrative tribunal process to discharge its consultation duty, it must notify the affected Indigenous groups.

The NEB is not "strictly speaking" the Crown or agent of the Crown, since it operates independently of the Crown's ministers. By exercising executive power of the Crown, however, the NEB is the vehicle through which the Crown acts.

The NEB must withhold approval where the duty to consult remains unfulfilled.

Written reasons are necessary to explain how Indigenous concerns were considered, but a "formulaic Haida analysis" (strength of claim and potential impact) is not required in every decision.

The power of tribunal to decide questions of law implies a power to decide constitutional issues properly before it.

Since the duty to consult is a constitutional imperative, it gives rise to a special public interest that supersedes other concerns typically considered by tribunals tasked with assessing the public interest. An approval cannot be in the public interest if the duty is not fulfilled.

The Court found no conflict in the NEB both conducting consultation and evaluating adequacy of consultations as a neutral arbiter, so long as its legal decisions comply with the law and the Constitution.

The interests of Indigenous groups can be balanced with other interests at the accommodation stage. The duty to consult does not provide Indigenous groups with a “veto” over final Crown decisions. Proper accommodation “stress[es] the need to balance competing societal interests with Aboriginal and treaty rights.”

The duty to consult is not a vehicle to address historical grievances. The subject of the consultation is the impact on the claimed rights of the current decision.

Important questions still remain following these decisions. If direct Crown engagement with an affected Indigenous group is necessary, how can an independent quasi-judicial tribunal create that opportunity within its process and maintain procedural fairness? Is the power to impose conditions on an approval sufficient to satisfy accommodation requirements when, for example, government compensation may be necessary? What is the extent of a tribunal's power to deal with any issues of justification when aboriginal rights are infringed and the impact cannot be mitigated?

As the Court observed in the Chippewas of the Thames case, "True reconciliation is rarely, if ever, achieved in the courtrooms." (at para. 24) The federal government is pursuing reforms to the federal environmental assessment process and the NEB structure. These cases will inform that initiative.

A more detailed summary of the two cases follows.

Clyde River (Hamlet) v. Petroleum Geo-Services Inc., 2017 SCC 40

Background to the Case

TGS-NOPEC Geophysical Company ASA, Petroleum Geo-Services Inc., and Multi Klient Invest AS (the “Respondents”) applied to the NEB for a Geophysical Operations Authorization (“GOA”) to conduct offshore seismic surveys in Baffin Bay and the Davis Strait.

The seismic surveys posed a high risk of adverse and non-compensable environmental effects, including disturbance of the migration route of mammals and fish which the people of Clyde River have depended on for generations for food security and economic, cultural and spiritual well-being. Under the Nunavut Land Claims Agreement (1993), the Inuit of Clyde River have established treaty rights to hunt and harvest marine mammals and these rights are important to the community.

The NEB launched an environmental assessment in 2012. Several deficiencies were identified in the Respondent’s consultation efforts. The Respondents could not answer basic questions from affected communities regarding marine mammals at meetings in 2013. The deficiencies led the NEB to suspend the assessment in 2013.

In response, the Respondents filed a 3,926 page document with the NEB. This document was made available online and delivered to the hamlet offices, but the document was largely not translated to Inuktitut. No other efforts were made to ensure the document was available to the communities (many with limited internet access) and the communities’ questions were answered.

The NEB restarted its assessment after the document was filed, but the Appellant and other Inuit organizations noted their dissatisfaction with consultation throughout the assessment process. The Appellant also requested that the Minister of Aboriginal Affairs and Northern Development and the NEB conduct a Strategic Environmental Assessment, but were denied.

The NEB’s final decision to grant the GOA concluded that the Respondent’s efforts to consult with potentially affected Aboriginal groups were sufficient, and that Aboriginal groups had an adequate opportunity to participate in the Environmental Assessment process. The report further noted that the seismic activity could change the migration patterns of marine mammals and affect their traditional harvesting by Inuit communities, but found that testing was unlikely to cause significant adverse environmental effects.

After the NEB approved the GOA, several parties applied to the Federal Court of Appeal for judicial review, including the Hamlet of Clyde River, Nammautaq Hunters and Trappers Organization (HTO)—Clyde River, and Jerry Natanine (a resident and the Mayor of Clyde River) (together, the “Appellants”).

Writing for the Federal Court, Dawson JA held that the NEB had been delegated procedural aspects of the duty to consult, and that “…the NEB has a mandate to engage in a consultation process such that the Crown may rely on that process to meet, at least in part, its duty to consult with Aboriginal peoples” (at para. 65).

The Federal Court concluded that while the potential impacts triggered “deep” consultation, the NEB’s process had afforded the Appellants adequately meaningful consultation to satisfy the Crown’s duty to consult, and the Terms and Conditions imposed upon the GOA offered reasonable accommodation (at para. 100).

The Supreme Court of Canada Allowed the Appeal from the FCA Decision

In a unanimous decision, the Court allowed the appeal. The Crown did not meet its duty to consult and the NEB’s decision is quashed.

The Court clarified three issues before explaining why the duty to consult was not met.

First, the NEB’s decision making process triggers the duty to consult when exercising executive power as authorized by legislation. While the NEB is not the Crown itself, the NEB is the vehicle through which the Crown acts (at para. 29).

Second, the NEB has the procedural and remedial powers under the Canada Oil and Gas Operations Act (“COGOA”) necessary to: 1) implement consultation; and 2) accommodate affected Aboriginal claims (at para. 33). The Crown can therefore rely on the NEB process to fulfill its duty to consult in part or in whole.

Third, the NEB must withhold approval where the duty to consult remains unfulfilled (at para. 39). Given the NEB’s broad powers under COGOA and the National Energy Board Act to decide questions of law, it must ensure that its decisions comply with section 35(1) the Constitution Act, 1982.

All parties agreed that deep consultation was required because the proposed seismic testing posed a high risk to marine mammals to which the Appellants have an established treaty right to hunt and harvest. The consultation provided failed to meet that level of consultation for several reasons.

First, the inquiry of consultation was misdirected. The NEB’s environmental impact assessment incorrectly looked at the impact on the Appellant’s hunting and harvesting right, when it should have looked to the source of that right—i.e., the treaty.

Second, the Crown did not advise the Appellants it intended to rely on the NEB proceedings to fulfill its duty to consult. The Crown must make clear to an affected Indigenous group that it will rely on the regulatory body process.

Third, the process itself failed to fulfill the Crown’s duty to deep consultation. There were no oral hearings, alternate opportunities for participation, or participant funding, and that “while these procedural safeguards are not always necessary, their absence in this case significantly impaired the quality of consultation” (at para. 49).

The Court concluded that, “The consultation process here was, in view of the Inuit’s established treaty rights and the risk posed by the proposed testing to those rights, significantly flawed,” (at para. 52) and that the Crown had breached its duty to consult.

The Court also suggested that, where consultation by the administrative body is inadequate, the Crown may fill gaps on a case-by-case basis, address a systematic gap through legislation or regulatory amendments, or seek reconsideration or postponement of a regulatory decision to carry out further consultation before the decision is rendered (at para. 22).

Background to the Case

In July 2012, Enbridge Inc. (“Enbridge”) applied to the NEB for approval under section 58 of the National Energy Board Act to reverse the flow direction of part of its pipeline between Sarnia, Ontario and Montreal, Quebec (“Line 9”). Enbridge also sought approval to increase the transport capacity from 240,000 barrels per day to 300,000 barrels per day and to transport heavy oil (the“Project”). The Project would take place on lands owned by Enbridge, except at one site where additional temporary work space would be required.

Line 9 crosses the traditional territory of Chippewas of the Thames First Nation (“Chippewas of the Thames”)

Enbridge consulted with the Chippewas of the Thames and other Aboriginal groups within 50 kilometres of the Project. The NEB issued notice to 19 potentially affected Indigenous groups, including the Chippewas of the Thames First Nation, who were granted funding to participate as an intervenor. They filed evidence and delivered oral argument at the hearing delineating their concerns that the project would increase the risk of pipeline ruptures and spills along Line 9, which could impair their use of the land and the Thames River for traditional purposes.

The NEB issued its decision in March 2014. The NEB acknowledged the potential threat to the Appellant's traditional land use, but found that "any potential Project impacts on the rights and interests of Aboriginal groups are likely to be minimal and will be appropriately mitigated" given the Project's limited scope, the commitments by Enbridge, and the conditions imposed by the NEB. Further, the Project would occur within Enbridge's existing right of way (at para. 23).

The Chippewas of the Thames appealed the NEB decision to the Federal Court of Appeal.

Federal Court of Appeal Dismissed the Appeal

In a 2-1 split decision, the majority of the Federal Court dismissed the appeal, and determined that the NEB did not have to determine whether the Crown owed a duty to consult under Haida Nation v. British Columbia (Minister of Forests), 2004 SCC 73 before approving the Project. The majority also held that the NEB had not been delegated the power to fulfil the Crown’s duty to consult from Haida either under the NEB Act or through its response to the Chippewas of the Thames’s request for consultation.

In dissent, Rennie JA noted that the NEB’s approval of a section 58 is final (in contrast to a section 52 application, where final approval lies with Cabinet), so the NEB must consider whether the duty to consult existed and whether it had been discharged (at para. 112).

Supreme Court of Canada Dismissed the Appeal

In a unanimous decision, the Supreme Court dismissed the appeal by the Chippewas of the Thames. In doing so, it clarified several issues related to the NEB's role in Crown consultation.

An NEB approval section 58 is a final decision and is Crown conduct that will trigger the Crown's duty to consult (at paras. 30-1). “As a statutory body with the delegated executive responsibility to make a decision that could adversely affect Aboriginal and treaty rights, the NEB acted on behalf of the Crown in approving Enbridge’s application” (at para. 31).

The Crown may rely on an administrative body to fulfill its duty to consult so long as the body possesses the statutory powers to do what the duty to consult requires in the particular circumstances. If the agency’s statutory powers are inadequate or the agency does not provide adequate consultation, the Crown must provide other avenues to fulfill the duty prior to project approval.

The Court found no conflict in the NEB both conducting consultation and evaluating adequacy of consultations as a neutral arbiter, so long as its legal decisions comply with the law and the Constitution. The Court noted it is not unusual for regulatory agencies to carry out overlapping functions without giving rise to a reasonable apprehension of bias (at para. 33).

The NEB's obligation to assess the adequacy of the duty to consult does not depend on the Crown’s participation in the process. Since the NEB decision was the final say on the application, the duty must be discharged before the government or delegated authority approval of a project that could adversely affect Aboriginal or treaty rights (at para. 36).

“[T]he duty to consult is not triggered by historical impacts,” and “it is not the vehicle to address historical grievances” (at para. 41). The scope of the duty to consult must be limited to the proposed project and approval in question.

"Given the NEB's expertise in the supervision and approval of federally regulated pipelines, the NEB is particularly well positioned to assess the risks posed by such projects to Indigenous groups. Moreover, the NEB has broad jurisdiction to impose conditions on proponents to mitigate those risks. Additionally, its ongoing regulatory role in the enforcement of safety measures permits it to oversee long-term compliance with such conditions. Therefore, we conclude that the NEB’s statutory powers under s. 58 are capable of satisfying the Crown’s duty to consult in this case." (at para. 48)

The constitutional dimension of the duty to consult gives rise to a special public interest which surpasses economic concerns. The public interest cannot be met if the Crown's duty to consult has not been met. Nevertheless, the interests of Indigenous groups can be balanced with other interests at the accommodation stage. Thus, the duty to consult does not provide Indigenous groups with a “veto” over final Crown decisions. Proper accommodation “stress[es] the need to balance competing societal interests with Aboriginal and treaty rights” (Haida, at para. 50). (at para. 59)

The Court found NEB’s statutory authority was sufficient to satisfy the Crown’s duty to consult. The NEB process gave the Chippewas of the Thames with adequate opportunity to participate in the decision-making process, sufficiently assessed the potential impacts on their rights, and found that those impacts were minimal and could be mitigated. Further, the NEB offered appropriate accommodation through the imposition of conditions on Enbridge (at paras. 51-58).

The Court also commented on several shortcomings in the NEB process that were worth noting but not sufficient to overturn the NEB decision.

Where deep consultation is required, the NEB must provide written reasons which “explain how it considered and addressed” Indigenous concerns. "However, this requirement does not necessitate a formulaic 'Haida analysis' in all circumstances." (at paras. 62-63) The Court noted the NEB did not discuss the degree of consultation required, but explained that "even taking the strength of the Chippewas of the Thames' claim and the seriousness of the potential impact on the claimed right at their highest, the consultation undertaken in this case was manifestly adequate." (at para. 43)

The Court reaffirmed the direction the companion Clyde River case that "the Crown may rely on a regulatory body such as the NEB to fulfill the duty to consult. However, where the Crown intends to do so, it should be made clear to the affected Indigenous group that the Crown is relying on the regulatory body's process to fulfill its duty (Clyde River, at para. 23) (at para. 44). The Chippewas of the Thames asserted that they did not received explicit notice from the Crown until after the NEB hearing was complete. Nonetheless, the Court thought "the circumstances of this case made it sufficiently clear to the Chippewas of the Thames that the NEB process was intended to constitute Crown consultation and accommodation. Notwithstanding the Crown's failure to provide timely notice, its consultation obligation was met." (at para. 45)